More find homes out of reach

EXAMINER STAFF REPORT

Published 4:00 am, Thursday, March 9, 2000

The number of Bay Area residents who can afford to buy a median-pric ed home in the region dropped to its lowest point since 1992, according to an annual report by the California Association of Realtors.

The Bay Area Annual Housing Affordability Index in 1999 was 27 percent, the lowest since 1992, when it also was 27 percent. The median price for a Bay Area home last year was $365,000, according to the association's index. The regional figure is based on a composite of separate cities and locations.

The lowest affordability was in San Francisco at 18 percent, followed by 19 percent in San Mateo County, 20 percent in Marin County and 28 percent in Santa Clara County.

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The steepest Bay Area fall in affordability during 1999 was Alameda County, where it dropped from 36 percent to 30 percent.

Despite the decline, however, affordability has not reached crisis proportion as it did during the last major real estate boom in the Bay Area. Affordability reached a record low in 1989, when only 17 percent could afford to purchase the median priced home.

Rising median home prices in almost every area of California, coupled with a sharp increase in mortgage interest rates, contributed to the current decline, according to the association.

The shrinking housing affordability in the Bay Area is reflected in a statewide drop; from 40 percent in 1998 to 37 percent in 1999, also the lowest since 1992, when it was 32 percent. "California's 37 percent affordability index is significantly lower than the 55 percent affordability index for the nation," said Richard F. Gaylord, association president. "This 18 percentage point gap between California and the rest of the country is the largest since 1995, when it was also 18 percent.

"Eventually, this gap could prove to be the Achilles' heel for economic development in California. The availability of affordable housing is a critical element in the economic health of the state."

In Southern California, San Diego County had the lowest affordability index at 33 percent and also the sharpest decline: 5 percentage points in 1999 from 38 percent in 1998. Orange County followed, with 34 percent. In Los Angeles County, it was 39 percent

"Albuquerque, Austin, Denver, Las Vegas, Phoenix, Portland, Salt Lake City and Seattle all have significantly higher affordability indexes, despite dramatic home price appreciation in many of those areas." said Leslie Appleton-Young, association vice president and chief economist. &lt;